Co-working spaces in India - The dawn of a new era

In the age of millennials where disruption is the order of the day, office space has come a long way since it was conceptualised as a place of work, with ungainly desks and chairs comprising the set up

India is at the cusp of a co-working revolution with several large players spread across the country. Some of the major co-working spaces are run by firms like WeWork, Office Pass, Awfis, myHQ, AltfCoworking, CoWrks, Bangalore Alpha Lab, Garge, BHIVE Workspace, Bombay Connect, Co Life, 91 Springboard, Investopad and Innov8, amongst others.

In the age of millennials where disruption is the order of the day, office space has come a long way since it was conceptualised as a place of work, with ungainly desks and chairs comprising the set up. Over the years, various researches endeavoured to map the productivity of an employee, most of which pointed towards a better work environment to achieve greater heights. The past few decades, therefore, were devoted to an evolution in the workplace, observing significant structural change in office space, right from space utilisation to placement of equipment and automation. With newer business avenues opening up, office space design continued to evolve at an incessant pace, covering not only its structural facet but also involving aspects such as recreation facilities and digitalisation of the office.

It comes as no surprise that with the quantum of ground covered in office space design and development, a workplace today has ceased to be a single, fixed address in a commercial district located 15–20 km away. Like most commodities in present times, workplaces, too, have come to be redefined as space that could be accessed anytime and from anywhere, providing Just-In-Time services with the help of technology.

India, today, is witnessing a proliferation of start-ups and SMEs, buoyed by the government’s concerted efforts to create a sustainable eco-system for entrepreneurs in the country. On their part, the entrepreneurs—a large number of them being millennials—believe in harbouring global aspirations and the mantra adopted by their start-ups reflect their staggeringly ambitious mindset that was not prevalent till a few years back. This provides a perfect platform for co-working business centres to cater to the office space needs of these growth-seeking start-ups.

There are several benefits including flexible working options at affordable rents, networking opportunities and shared amenities to be had from working in co-working set-ups. Start-ups and SMEs stand to save as much as 15–20% by working in a co-working space, while enjoying the benefits of a fully functional, plug-and-play modern workplace.

Lots of investments are being made into co-working space and several start ups are looking to expand with their alliance with builders.

Of late, several developers, too, are planning on starting their own co-working offices to provide incubation spaces, or divide large floor plates for smaller occupants. On an average, the cost per seat per month in a co-working centre in a region like NCR is in the range of Rs. 10,000–15,000 in central business district (CBD) Delhi and Rs. 12,500–15,000 in CBD Gurugram. With prime rentals in Gurugram averaging Rs. 250 per sqft per month, an office space of 700 sqft, housing 10 employees, would amount to a whopping Rs. 75,000 per month. In contrast, 10 seats in a co-working centre would cost Rs. 150,000 per month.

Despite the demand for co-working space, there are several challenges that have to be tackled; for instance – changing the conventional mindset of a client who would want to book a meeting room based on the touch and feel factor rather than an app. Further, owing to the inherent risks involved in the sector, a few operators strive to mitigate the risk by preferring to lease out their entire area, or a large part of it, to companies that can act somewhat as ‘anchor tenants’, thereby helping them get a fixed-income stream.

Going forward, with the advent of major co-working players in India and an increasing number of such facilities coming up across cities to cater to the demand of start-ups and SMEs, the co-working sector is expected to thrive and could prove to be a significant disruptor on India’s commercial real estate market. Currently, NCR and Mumbai figure prominently on the seat availability front, followed by cities such as Bangalore and Kolkata. Mumbai accounts for a substantial amount of transactions as well. However, at present, the segment is at a nascent stage and not all the co-working operators are likely to be able to hold their own in the long run, owing to their inability to mitigate the risks in their business models or have enough stronghold in non-prime markets. This would expectedly result in consolidation among co-working operators and the market would be divided amongst a handful of large players.

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